





LAND-GRANT RAILROADS 
AND THEIR RELATION TO GOVERNMENT 
TRANSPORTATION 


A LECTURE 

DELIVERED BEFORE THE OFFICERS OF THE 
QUARTERMASTER RESERVE CORPS AT 
WASHINGTON, D. C., JUNE 26, 1917 


By 

MAJ. ROBERT E. SHANNON 

QUARTERMASTER RESERVE CORPS 



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WASHINGTON 

GOVERNMENT PRINTING OFFICE 
1917 





D. of D. 

OCT 22 I9TT 


LAND-GRANT RAILROADS AND THEIR RELATION TO 
GOVERNMENT TRANSPORTATION. 


INTRODUCTION BY CAPTAIN DAVIS. 

GKXTLEMEX: It is always said that a pjood soldier does 
Ids duty. Therefore, I am forced to believe that we must have 
a number of very good soldiers to be in attendance on a hot 
nijjcht like this. This is one of the nights when we are happy 
and then we are sorry. On this occasion we are happy to have 
for our speaker a man who perhaps is the best-informed man in 
the United ^^tates to-day on the subject of land-grant railroads 
and their relation to Government transportation. We are sorry 
because this will be the last opportunity that we shall have to 
hear our sjieaker because of the fortunes of war. He is to 
depart during the week for station in another city. 

I am sure that all who know our speaker have always known 
him to be a jolly, go^-natuved, well-met Irishman, always 
good-natured, always happy whether he really was or not. 

It is a pleasure, I assure you, to introduce as the speaker of 
the evening Waj. Robert E. Shannon, Quartermaster Reserve 
Corps. [Applause.] 

LECTURE BY MAJ. SHANNON. 

GEXTI.E3IEX: This is a subject on which you will find very 
little written. When I first began to make a partial stiidy 
of land-grant railroads I was really surprised myself to find 
how little there was available on the subject, unless you wanted 
to dig out—taking a great deal of time—from the old Congres¬ 
sional Records. From most of those reports of Congress and 
other things of that kind I have compiled the data which I am 
going to give you to-night. I haven’t gone very extensively into 
the details of rate making, for that is a subject with which the 
average quartermaster has little to do. There are only four 
quartermaster’s ottices that settle transportation accounts, and 
it is more than likely that they will be consolidated into one. 

( 3 ) 



4 


A land-grant railroad is one wliicli was aided in its construc¬ 
tion by grant of public lands. A bond-aided road was not only 
given grants of public lands, but, in addition thereto, the Gov¬ 
ernment issued bonds, the proceeds of which were devoted to 
construction of railroads, under legislation that required the 
aided railroads to pay the interest on these bonds and to pay 
for the bonds at maturity. 

In beginning this subject it may be of interest to show how 
Congress came to make the many grants of public land to aid 
in the construction of railroads. 

The policy of granting lands, or the proceeds of the sales 
thereof, for the purpose of internal improvements, and to in¬ 
crease the value of the public property, was early adopted by our 
Government. By the act of April 30, 1802, one-twentieth of the 
proceeds of the sales of the public lands lying within the State 
of Ohio was set apart “ to be applied to the laying out and mak¬ 
ing of public roads, leading from the navigable waters emptying 
into the Atlantic to the Ohio, to the said State and through the 
same, such roads to be laid out under the authority of Congress, 
with the consent of the several States through which the road 
shall pass.” 

This act was approved by President Jefferson and forms the 
basis on which similar acts were predicated. Every President 
of the United States from President Jefferson, in 1802, to Presi¬ 
dent Grant, in 1871, approved similar acts for wagon roads, 
canals, or railroads, a change, however, being made in that the 
land itself was given instead of the proceeds from the sales 
thereof. 

A great many of the canals that were constructed in the Middle 
AVest during the early part of the last century were aided by 
grants of public lands, and also many of the public roads, a 
total of 4,597,668.32 acres of public lands having been given by 
the Government to aid in the construction of canals, and a total 
of 2,945,262.29 acres having been granted to aid in the construc¬ 
tion of wagon roads. 

It was but natural that Congress, desiring to aid in the con¬ 
struction of transportation facilities, should follow up their 
grants to canals and wagon roads with grants of public lands 
to aid in the construction of railroads; and in determining the 
reason which actuated Congress in assisting the construction of 
railroads by these grants it is well to consider the population of 
the States traversed by some of the large land-grant lines at the. 


0 


time these grants were made, as compared with the present 
population, the figures in each case being those of the census 
of 18G0, as compared with the census of 1910. 

NORTHERN PACIFIC RAILROAD. 

Minnesota, 172,073; Dakota (which included what is now 
North and South Dakota), 4,837; Oregon (including Idaho and 
Montana), 52,465; Washington, 11,594; or a total population in 
1860 in all these States of 240,969, as against a population of 
6,053,054 in 1910. 

UNION PACIFIC-SOUTHERN PACIFIC SYSTEM. 

The States of Nebraska, Kansas, Colorado, Wyoming, Utah, 
and Nevada had a combined population of 225,864 and Cali¬ 
fornia a population of 379,994, making a total of 605,858 in 1860, 
as against 6,660,927 in 1910. 

ATCHISON, TOPEKA & SANTA FE RAILWAY. 

The combined population of Kansas, Colorado, New Mexico, 
and Arizona in 1860 was 234,999; in 1910, 3.021,528. 

In can readily be seen from the above figures that in none 
of the States west of tlie Missouri River was there population 
enough to justify the building of railroads with any expectation 
of sufficient earnings t > even pay operating expenses for some 
time, and Congress undoubtedly recognized this fact; but this, 
evidently, was only incidentally a reason for making these grants. 
One of the strongest arguments for governmental aid in the 
construction of railroads in the West was the fact that these 
railroads, when built, would assist greatly in settling the coun¬ 
try and enal)le th.e Covernment to dispose of its lands. 

In the States and Territories west of the ^Mississippi River 
were millions of acres of public lands for which there was no 
sale, as the country was sparsely inhabited; there‘was great 
danger from hostile Indians, and practically no means of trans¬ 
portation. Nearly all the land-grant acts carried a proviso 
that the remaining sections should be sold to settlers at not less 
than double the minimum price per acre, so that, so far as the 
General Government was concerned, there was absolutely no 
loss in revenue, but in the majority of cases an immense gain. 
Nor did it matter, so far as the revenue of the Government 
from these lands was concerned, how many roads were thus 


6 


authorized to be constructed, for if built they would open of a 
vast extent of country that without transportation facilities 
was practically worthless, and thus the Government and the 
people would be mutually benetited. If the roads were not 
built within the time specified the lands reverted to the Gov¬ 
ernment. 

Still another reason was the great need for these railroads 
(and particularly the transcontinental lines) from a military 
standpoint. With no means of supplying or recruiting an army 
on the Pacific coast, except by the long route across Panama or 
overland by wagon transportation, the Pacific States and Terri¬ 
tories would have been at the absolute mercy of aiiy hostile for¬ 
eign power. 

In 1S26 the House Committee on Roads and Canals (H. Rept. 
No. 147, 19th Cong., 1st sess.), to which was referred the peti¬ 
tion of the State of Illinois, asking aid in the construction of a 
canal, recommended the grant— 

“ For the following permanent reasons, independent of others 
temporary in their character: 

“ First. That it was important to establish military highways 
through a comparatively unsettled country. 

“ Second. That because of the enhanced value of the lands 
adjacent to the improvements, the Treasury would be directly 
reimbursed and also indirectly by the revenue to be anticipated 
from such lands ”— 
and added; 

“ In Illinois and Missouri there remains to be sold not less 
than 70,000,000 acres of public land. The Nation as yet, there¬ 
fore, is the great proprietor in both those States, and while it 
will, by adopting the measure proposed, be advancing the local 
interests of the people of those States, as well as the people of 
a large portion of the Union, it will, in a still greater degree 
be advancing its own.” 

Thirty years later the Select Committee of the House on 
Pacific Railroad and Telegraph (H. Rept. No. 358, 34th Cong., 
3d sess., Aug. IG, 1856), in rendering a favorable report on 
grants to aid in the construction of various railroads, including 
three transcontinental lines, made the following statement: 

“ No better example can be given of the benefits resulting from 
the construction of railroads, to both public and private prop¬ 
erty, than that of the Illinois Central Railroad. On the line of 
that road the public lands had been offered for sale for many 


7 


years witiunit findinj? a purchaser, and were at last reduced to 
tlie lowest inininuim price, 12^ cents per acre. Even this reduc¬ 
tion was not sufficient to induce their sale; but after the Gov¬ 
ernment had given away one-half to assist in building the road, 
the other half was very readily sold for $2.50 per acre. Similar 
results have followed the building of nearly every other railroad 
in the country, although in many instances the roads came in 
direct competition with river and canal transportation. A 
railroad across the continent would open up a vast extent of 
country to settlement, and much of what is now believed to be 
sterile and barren will, no doubt (as in California), be found to 
yield bountifully to the agriculturist. These lands are now 
totally without value, no matter how fertile they may be, and 
to the Government, worthless. By giving away one-half for the 
construction of the proposed roads the Government will thereby 
attach a value to the remainder; and whatever that value may 
be will be the amount the Government is gainer by the trans¬ 
action.” 

Nor does there seem to have been any great difference of opin¬ 
ion at that time as to the propriety of the grants of land by the 
Government to aid in the construction of railroads. Both the 
Democratic and Republican Parties at their national conventions 
in 1850 passed resolutions approving of such aid, which were 
incorporated in their platforms and also affirmed in the platforms 
of both parties for 1800, and the attitude of the press of that day 
is illustrated by the following article from the Chicago Evening 
Post of ^lay 30, 18.50: 

“ The official returns of the new census of Illinois (1855) have 
just been received. The entire population is over 1.300,000, 
which is a gain of about 50 per cent upon the census of 1850. 
By comparing the increase through the several decades and semi¬ 
decades since the census lias been taken, it will be seen that the 
gain has been much larger during the last five years than in any 
former period. The railroad system has been developed in 
Illinois within the last five years, and one of the fruits we see 
has been to double the population. A correspondent showed the 
other day that another was to quintiple the value of her land. 
Add to these the improved society, the multiplied educational 
and moral infiuences which follow population, and take advan¬ 
tage of all cheap methods of communication, and then one may 
begin to appreciate the advantages of the modern railway sy.stem 
as an engine of civilization.” 


8 


There was, however, a difference of opinion as to the feasi¬ 
bility of building a transcontinental railroad. 

A minority report of the Select Committee on Pacific Rail¬ 
road and Telegraph (H. Kept. No. 358, 34th Cong., 3d sess., Aug. 
16, 1856), express grave doubt as to whether a railroad could 
ever be built “ through those vast mountain regions whose aspir¬ 
ing summits present 12 feet of defying snow to the burning rays 
of a July sun,” and the opinion that the only way in which 
transportation could be performed through the mountains in 
winter was by dogs and sleds. The minority report then pro¬ 
ceeded to call attention to the difficulty of operating a railroad 
during several months of the year on the plains this side of the 
Rocky Mountains, and a doubt as to even one transcontinental 
railroad being a paying proposition, in the following language: 

” So rapid is the fall of snow and so resistless do the winds 
sweep over these almost boundless plains it is quite impossible 
to gain a distant shelter. 

“ So with a train of cars running up the plain from Iowa or 
Missouri to the foot of the Rocky Mountains, a distance of some 
800 miles, how, in a storm, is shelter, or wood, or water, or food 
to be gained? Arrested 800 miles from Iowa in November, how 
is a train of cars to be relieved before May? By what means 
could it even be visited? In such a case the sheltering skill 
would be useless. To talk of doing business in the winter season 
on a road through such a region, though every conductor was a 
Kit Carson and every traveler a Fremont, would seem to be idle 
and preposterous.” 

“As to the road from El Paso to California, the same high 
railroad authority, Col. Benton, says it passes over a country 
so sandy, sterile, and desolate that a ‘ wolf could not make his 
living.’ Devoid of water, fuel, soil, food, and population, it is 
indeed difficult to see why a costly road should be built across 
a country which few have seen and no one will inhabit. The 
swiftest riding for four and twenty hours on the fleetest horse 
may fail to convey the traveler to the residence of any human 
being; and this holds good of every route north and south 
recommended by the committee. 

“ Take, then, the travel, and what freight can be obtained, 
and who can say that the earnings of a road from California 
to Mississippi would be equal to the sum of $8,400,000 per year? 
If a road can not be relied on to earn that vast sura, then its 
construction should not be commenced. At $70,000 per mile, 


9 


either road would cost a little over $140,000,000; the annual in¬ 
terest upon that at 6 per cent is $8,400,000. Of the earnings, it 
takes one-half to pay the expenses of running the road and keep¬ 
ing it in repair. To realize the $8,400,000 with which to pay the 
interest upon the cost, the road, therefore, would have to earn 
double that sum, which is $16,800,000. Now, can anyone show 
that the road can earn the lirst half of that sum, with which to 
run it and keep it in repair, much less the second $8,400,000, 
with which to pay the interest on first cost? Can anyone 
point out satisfactorily from what sources even half enough 
earnings ($4,200,000) can be obtained to keep the road running 
and in good condition? Not only so, the committee recommended 
the House to construct three such roads, the shortest of which 
to be not less than 2,032 miles long, and ending with seven 
roads east of the mountains and three west of it. To properly 
support that hydraheaded road alone, the united support of the 
entire industrial interests of the whole British Empire would 
prove utterly inadequate.” 

It is hard to realize that these views as to the impracticability 
of construction, operation, and maintenance of a transconti¬ 
nental railroad were held by able and representative men only 
60 years ago. 

To-day one steps into a Pullman car in Chicago and in three 
or four days steps out of the same Pullman in San Francisco, 
Los Angeles, or Seattle, and the trip has been made in far 
greater comfort and luxury than even the traveler between New 
York and Washington in 1856 would have deemed ever possible. 

The skill of American engineers conquered the mountains, and 
it is a rare occurrence for any serious delay to be caused by 
even the heaviest snows. 

To-day there are not only the three railroads across the 
western part of the country, \vhich the minority thought “to 
properly support, the entire industrial interests of the whole 
British Empire would prove utterly inadequate,” but there are 
eight railroads in the United States alone wdiich reach the 
Pacific coast, and instead of the $8,400,000, which the minority 
doubted would ever be earned, the combined revenue of these 
eight roads for the fiscal year ending June 30, 1911, was over 
$635,000,000, and this amount does not include the revenue of 
Canadian roads, or any of the prairie lines, such as the Burling¬ 
ton, Northwestern, or Rock Island, which do not control a 
through system to the coast. 

980—17 - 2 



10 


Although these railroads are now earning immense sums, 
surely great credit should be given to the men who, even 
though the Government did donate lands to aid, were able in 
those days to finance and build railroads across a country where 
eminent authorities deemed it impossible, and some parts of 
which were thought to be “ so sterile and desolate that a wolf 
could not make his living.” 

It is not an easy matter for those of us who know only the 
West of to-day to realize the vast changes that have occurred 
in the past 60 years, and for that reason the opinions of one 
who has spent 50 years in the public service and who was per¬ 
sonally familiar with the conditions that existed in the West 
at the time of the passage of the land-grant legislation are 
entitled to great deference. Hon. Joseph G. Cannon, of Illinois, 
in an article in the Saturday Evening Post of May 3, 1913, 
touched on homestead and railroad land-grant legislation and 
said : 

“ IV^e have some people now who fear the Government has 
been too liberal and has wasted its public land, but I can re¬ 
member when the Government practically could not give away 
lands that are now worth $200 an acre. We have given away 
millions of acres of the public lands, but we have by so doing 
built up an empire in little more than half a century that could 
not have been developed in a thousand years under the old 
regime, and we have made men more of an asset than mere 
land. 

“ Why, in 1860 we had but 31,000,000 people in this country 
and only 11,000,000 west of the Alleghanies. We passed home- 
•stead laws, gave public lands to the people and to aid in the 
construction of railroads. This legislation covered the whole 
country and gave an impetus to every kind of industrial devel¬ 
opment, and, with the settlement of the old question checking 
the extension of slavery, it made the East a center of manufac¬ 
ture and the great American desert and the staked plains the 
granary of the world. Even the mountain fastnesses have been 
converted into gardens, and millions of enterprising people there 
are still unable to estimate their wealth and opportunity. 

“ I have no regret for the liberality of the Government in giv¬ 
ing away public lands, for this liberality brought such results 
as would not have been recorded in many generations under the 
old policy of having the Government hoard its public lands and 
wait for purchasers. The losses to the Government were rela- 


11 


tive. The railroads and homesteads were tremendous factors 
in the building of a Nation ; and to-day nearly one-half of our 
western people are there, making two-thirds of all the wealth 
taken from the soil and two-tifths of all the manufactured 
products of this country. Yes; the Government has been liberal, 
and liberally has it been rewarded.” 

When we take these facts into consideration and consider the 
further fact that on account of the land-grant railroads the 
Government is receiving and will always receive an average 
deduction of about IS per cent on all its freight traffic, as well 
as passenger traflic for the War and Navy Departments, are 
we not .iustified in believing that the grant of lands to aid in 
the construction of railroads was a good business proposition? 

In 1822 (3 Stat., G59) a grant of land was made to the State 
of Illinois for the purpose of opening a canal to connect the 
Illinois Iliver with Lake ^Michigan, and this act carried a clause 
tliat was afterwards followed closely in the various grants made 
to aid in the construction of railroads, viz: 

“ The said canal, when completed, shall be and forever re¬ 
main a public highway for the use of the Government of the 
United States, free from any toll or other charges whatever, 
for any property of the United States or persons in their serv¬ 
ice passing through the same.” 

This phraseology was followed literally in the various canal 
grants, but in the railroad grants the last clause was changed 
from “ persons in their service ” to “ troops of the United 
States.” P’rom a Government standi)oint this was unfortunate, 
for had this change not been made the Government would have 
been entitled to a reduction on all its passanger transportation 
instead of that performed for the Army and Navy only. 

On [March 2, 1833, Congress authorized the State of Illinois 
to divert the canal grant of [March 2, 1827, and to construct 
a railroad with the proceeds of said lands. This was the first 
congressional enactment providing f(u* a land grant in aid of 
a railroad, but it was not utilized by the State. 

The act of September 20, 1850 (0 Stat., 46G), was the first 
railroad act of real importance, and initiated the system of 
grants of land for railroads by Congress which prevailed until 
July 1, 18G2, many of the grants after that date being made 
direct to the corporation instead of through the State. 

This act gave to the States of Illinois, Mississippi, and Ala¬ 
bama a grant of public lands to aid in the construction of rail- 


roads from Chicago and Dubuque to the Ohio River and from 
the Ohio River to Mobile. This was the Illinois Central grant 
and the Mobile & Ohio grant. Senator Stephen A. Douglas, 
of Illinois, was largely instrumental in securing the passage 
of this act. The act of September 20, 1850, was followed in the 
succeeding six years by many other acts granting lands to the 
various Western States to aid in the construction of railroads. 
In 1852, to the State of Missouri for railroads between St. 
Joseph and Hannibal and between St. Louis and Springfield; 
in 1853, to the States of Missouri and Arkansas for railroads 
between Cairo and Texarkana and between IMemphis and Fort 
Smith; and, in 1856 and 1857, to the States of Alabama, Florida, 
Iowa, Louisiana, Michigan, Minnesota, Mississippi, and Wis¬ 
consin for 34 various railroads. Other grants were made from 
time to time up to 1871, when the last grant was made, being one 
to aid in the construction of a railroad from El Paso to San 
Diego and from Tehachapi Pass to Yuma. The grant was 
never earned on the former portion, and the latter portion is 
now the Southern Pacific land-grant line from Mojave to Yuma. 

As the country west of the Mississippi River became more 
thickly settled the need of Government aid for railroad con¬ 
struction became less apparent, and the act of 1871, referred to 
above, does not seem to have met with general approval, as 
during that year the State legislatures of Indiana, INIissouri, 
Ohio, and Pennsylvania transmitted to Congress resolutions 
protesting against any further grants of public lands to corpo¬ 
rations. 

On account of the interruptions to business caused by the 
Civil War, and for various other rea.sons, many of the railroads 
authorized by these various acts were not constructed within 
the time specified therein, and supplemental acts were passed 
by Congress at various times up to 1871 extending the time 
for completion of the road, and in some cases changing the con¬ 
ditions of the grant. Considered in their relation to Govern¬ 
ment transportation, the principal cases of the latter character 
were those changes affecting what is now known as the Rock 
Island land-grant line from Memphis to Argenta, the St. Louis, 
Iron Mountain & Southern line from Birds Point to Texarkana, 
the Missouri, Kansas & Texas line from Junction City to 
Humboldt, and the Lake Shore & Michigan Southern Michigan 
Central line from Jonesville to Muckinaw City. The original 


13 


acts covering these grants carried the following proviso in 
regard to transportation for the Government: 

“And the said railroad and branches shall be and remain a 
public highway for the use of the Government of the United 
States, free from toll or other charges upon the transportation 
of any property or troops of the United States.’’ 

But the roads were not completed within the time specified 
in the acts, and in 1866 supplemental acts were passed extend¬ 
ing the time for completion of the roads, and adding the fol¬ 
lowing additional proviso to the grants for the road west of the 
Mississippi River: 

''And provided fiu'ther, That all property and troops of the 
United States shall at all times be transported over said rail¬ 
road and branches at the cost, charge, and expense of the com¬ 
pany or corporation owning or operating said road and branches, 
respectively, when so required by the Government of the United 
States.’’ 

Provisions having the same effect were also added to the 
grants to the Lake Shore & Michigan Southern and Michigan 
Central Railways. 

Plad these railroads been constructed under the original acts, 
only 50 per cent deduction would be made for Government trans¬ 
portation, but the later acts made them free lines. 

Even with the extension of time, referred to heretofore, many 
of the roads were either not completed or completed only in 
part, and, as the lands covered by the gi'ants had been with¬ 
drawn from entry, it was not many years l)efore it became ap¬ 
parent that some action was necessary. The Commissioner of 
the General Land Office, in his annual report for 1877, called 
the attention of Congress to the condition of grants which had 
expired by limitation and asked that some legislation be passed 
canceling the grants. 

The matter was taken up by Congress in 1878, and the House 
Committee on the Public Lands, after quoting from the report of 
the Commissioner of the General Land Office, recommended leg¬ 
islation in the following language: 

“ From the foregoing it will be seen that to effectually revert 
to the Government, restore to the public domain, and open to 
actual settlement the lands of the grants which have lapsed by 
limitation and defualt, it requires the specific and declaratory 
legislation provided in the amended bill (H. R. 3544) hereto 
appended. 


14 


“ It is clearly in the power of Congress to enact this bill into 
a law; and it is its boiinden duty to put immediate stop to specu¬ 
lation on the public faith by corporations, to confirm the settlers’ 
title to their hard-earned homes, to raise the embargo of grasp¬ 
ing monopolies, and bid the great army of emigration to go for¬ 
ward.” (H. Rept. No. 911, 4.5th Cong., 2d sess., June G, 1878.) 

Despite this report, the only definite action taken by the 
Forty-fifth Congress was to direct a restoration of vacant lands 
falling outside the 20-mile limit of the Chicago, Rock Island <S: 
Pacific grant between Davenport and Council Bluffs (20 Stat., 
13.83), and no further action was taken for several years. 

On February 28, 1885, the Texas & Pacific grant from El Paso 
to San Diego was declared forfeited (23 Stat., 337) ; on July 
G, 188G, the Atlantic & Pacific grant from Springfield, Mo., to 
the Pacific Ocean was declared forfeited opposite the uncom¬ 
pleted portion of the road (24 Stat., 123) ; on INIarch 2, 1889, the 
Duluth, South Shore <Sc Atlantic grant was declared forfeited . 
from L’Anse to Ontonagon (25 Stat., 1008) ; and on September 
29, 1890, Congress passed an act naming all the other unearned 
railroad land grants and specifically canceling them (26 Stat., 
496). 

M'ith the exception of a few statutes providing for settlement 
of conflicting claims of railroad and settlers, the act of Septem¬ 
ber 29. 1890, was the last legislation by Congress affecting rail¬ 
road land grants. 

CHAPTER 2. 

EXTENT AND VALUE OF THE GRANTS. 

Nearly all of the various acts granting lands to aid in the 
construction of railroads in the Central West provided for a 
grant of every alternate section for 6 miles on each side of the 
road, an area equal to a strip of land G miles wide, but in the 
case of the Pacific Railroads this was increased to a grant of 
every alternate section for 10 miles on each side of the road 
in States and 20 miles on each side of the roads in Territories. 

^lost of the grants excepted mineral lands other than coal 
and iron lands, and also lands already occupied by actual set¬ 
tlers, although the railroad was authorized to select other lands 
in lieu thereof, within certain limits; and for various reasons, 
including those mentioned above, few of the railroads received 
the entire amount authorized by the acts. 


15 


In a statement issued by the General Land Office under date 
of Xoveinl)er 27, 1907, the total number of acres of land certified 
or patented to the land-grant railroads to June 30, 1907, was 
given as 107,722 553 acres, or approximately 168.316 square 
miles, a territory al'out one-fifth larger than the combined area 
of the States of Illinois, Indiana, and Ohio, and almost as large 
as the combined area of the New England States, New York, 
and I*enhsylvania, 

The Northern Pacific Railway was the largest beneficiary, 
having received patents to 31,658,331 acres, or approximately 
49,465 square miles, a territory 296 square miles larger than 
the State of New York. The next largest grants wore those of 
the Union Pacific Railway with 18,306,036 acres, and the South¬ 
ern Ihicific Co. with 16,012,228 acres, and from these figures 
the various grants range down to the Grand Trunk Railway, 
which only received 6,489. 

s^^)n account of the various reorganizations of many of the 
roadS'-aiffi loss of records by fire or otherwise there is no defi¬ 
nite datastvail^able as to the actual value to all the land-grant 
railroads of their ^jrants. 

On November 1, 1880, the auditor of railroad accounts esti¬ 
mated the value of public lands granted to railroad companies 
as 8391.804,610.16. This estimate was based on the amount 
reported by the railroads as realized from the sales of lands, 
plus an estimated value on the lands still held, and did not 
include any of the land-grant lines in Illinois, ^Michigan, Mis¬ 
sissippi, Alabama, or Florida. 

Tliis estimate is unquestionably very much below the actual 
value of the lands to the railroad companies. Considering the 
three largest land-grant lines, for which at least partial figures 
are available, we find that the Northern Pacific Railway up to 
June 30, 1902, had realized from sales of lands $66,881,107.65 
and still retained 18,192,080 acres, worth an average of at 
least $5 per acre, making a total of over $157,000,000. In their 
annual report for the fiscal year 1911 this company shows the 
amount of land still in their possession June 30, 1911, as 
10,110,019 acres and sales for the year 138,584 acres, at an 
amount of $1,495,892, or an average of about $10.80 per acre. 

The Union Pacific Railroad up to June 30, 1911, had realized 
from sales of lands $63,879,270.14, and according to Poor’s 
Manual for 1912 there was still unsold on that date 940,185 


16 

acres, the estimated value of which was $71,837,945.57, or a 
total of over $135,000,000. 

The Southern Pacific up to June 30, 1902, had received from 
sales of lands covered by their grants $30,803,036.36, and the 
company still owned at that time 7,827,887 acres, probably worth 
on the average $5 per acre, making the total value to the 
company about $70,000,000. For the year ending June 30, 1911, 
the company sold 84,594 acres at an average price of $10.33 per 
acre, and received from leases and pasturage $342,553. 

The total for these three companies alone on the above fig¬ 
ures is $362,000,000, and it is probable the total value of their 
granted lands to the companies was in the neighborhood of a 
billion dollars. No account is taken in these figures of the 
immensely valuable oil lands of the Southern Pacific Co., lo¬ 
cated on their grant, but the title to which is now in litigation. 
According to newspaper figures the value of these oil lands is 
about $500,000,000. 

The roads in the Central West have disposed of practically 
all their lands, and most of them were sold at a very low price. 
The Port Huron & Lake Michigan Railroad, now part of the 
Grand Trunk System, by their charter from the State of Michi¬ 
gan was compelled to sell their lands to settlers in occupancy at 
$1.25 per acre, and a few other grants carried similar provisos, 
the amount in most cases being .$2.50 per acre. 

The Illinois Central as late as 1865, nine years after the road 
was completed, had an advertisement in Appleton’s Railroad 
Guide for that year offering their lands at prices ranging from 
$7 to $12 per acre, on long time, with 20 per cent off for cash. 
The charter of this company from the State of Illinois for the 
original land-grant line provided that in lieu of taxes the rail- 
.road company should pay to the State 7 per cent of the gross 
earnings, and under this provision the Illinois Central Railroad 
paid to the State of Illinois, from the completion of the roads to 
April 30, 1911, inclusive, -$30,329,533.57. 

In so far as Government transportation is concerned, the rail¬ 
roads which received aid from the Government may be properly 
divided into four classes: 

(1) Bond-aided railroads .—Roads which, in addition to grants 
of land, were aided by Government bonds. For this purpose 
the Government issued bonds to an amount of $64,623,512. No 
deduction for transi)ortation was authorized in the acts grant- 


17 


ing lands to the bond-aided railroads, bnt their earnings on 
Government transportation were to be withheld until the 
amount of indebtedness represented by the bonds was satisfied. 
All bond-aided railroads have settled with the Government ex¬ 
cept the Central Branch of the Union Pacific (now part of the 
Missouri Pacific system), from Atchisonville, Kans., to Water- 
ville, Kans., a distance of 100 miles. The location of this road 
is such that it is seldom used for Government traffic. 

(2) Raih'oads u'liich transport Government troops and prop¬ 
erty at the east and expense of the eompany. —These roads are 
known as “ free roads,” and the grants under which they were 
constructed provided that the transportation of property and 
troops of the United States should be at the cost, charge, and 
expense of the company or its successors. 

(3) Railroads snhjeet to conyressional notion. —These roads 
are known as “ 50 per cent roads,” and the grants to them pro¬ 
vided that they should be a post route and military road, sub¬ 
ject to such regulations as Congress might impose restricting 
the charges for such Government transportation, and Congress 
has provided that the amount paid shall not exceed 50 per cent 
of the compensation paid by private parties for like and similar 
transportation. 

(4) Railroads ichieli are public highioays free from toll .— 
These roads are also known as “ 50 per cent roads,” and w’ere 
constructed under a provision that they should be and remain 
a public highway for the use of the Government of the United 
States free from toll or other charge upon the transportation of 
any property or troops of the United States. 

The meaning of this clause was a disputed one for many 
years. The War Department, in ISGl, upon the advice of the 
Quartermaster General, held, as shown by letter from Secretary 
Cameron to the president of the Illinois Central Railroad, dated 
August 15, 1861, that this clause reserved to the United States 
the use of the roadway without compensation, but that the car¬ 
rier was entitled to compensation for the use of its motive 
power, cars, and other facilities, and that a fair deduction for 
the use of the roadway would be 33J per cent of the charges 
paid for commercial transportation. 

In later years the various Government departments took the 
view that the clause referred to gave the Government free use 
of the railroad and its appurtenances. The question was car- 


18 


riecl into the courts, and the Court of Claims decided that the 
Government was entitled to free transportation over these roads. 
The matter was then carried to the Supreme Court, which, by a 
hare majority of one, reversed the decision of the Court of 
Claims, and after going extensively into the early history of 
railroads and showing that they were originally intended to be 
a public highway on which all persons might place vehicles of 
transportation, held that the clause declaring that these roads 
should remain public highways for the use of the Government 
meant only that it should have the right to use the roads, but 
that it did not have the right to require its transportation to be 
performed by the railroad companies. (Lake Superior & Mis¬ 
sissippi Railroad v. United States, 93 U. S., 442.) 

The question as to the proper deduction was again a matter 
of controversy for some years, until finally Congress, in 1882, 
established the present basis, under which 50 per cent of the 
commercial rate is paid. 

In the years that have elapsed since Government transporta¬ 
tion began over the land-grant railroads many questions have 
arisen as to the methods of deduction and the travel to which 
land-grant deduction is properly applicable. There is not suffi¬ 
cient time to go into these many decisions, hut the accepted 
basis for applying the land-grant deduction is as follows: 

On a local movement of freight or passenger (i. e., one moving 
over the line of one land-grant railroad only) the land-grant 
deduction is based on the percentage that the land-grant mileage 
bears to total mileage from point of origin to destination. 

On shipments moving over the lines of more than one com¬ 
pany the proportion accruing to each line is first determined 
on the basis of commercial divisions in effect, and deductions 
for each land-grant line are then made from the proportion so 
determined on the same basis as local traffic. 

Land-grant deductions are applicable on all freight traffic for 
the Government, but on passenger traffic can only be applied to 
the travel of the military branches or, as the law provided, 
troops of the United States. 

It is not necessary to route Government business over the 
land-grant lines themselves in order to secure the benefit of the 
land-grant rates. That they might participate in Government 
traffic practically all the important railroads, and some of the 
steamship lines of the United States, have agreed that where 


19 


such traffic is moved over their lines the same rates will be 
applied as if it moved over the land-grant lines. For example, 
the net passenger fare from New York City to San Francisco 
is made over the following land-grant route: Via Buffalo and 
the ^Michigan Central to Chicago, the Chicago, Burlington & 
Quincy to Kansas City, and the Atchison, Topeka & Santa Fe 
to San Francisco, but the passenger may move via the Pennsyl¬ 
vania Ilailroad to St. I.ouis, the ^Missouri Pacific to Pueblo, the 
Denver A Rio Grande to Salt I.iake, and the Western Pacific to 
San Francisco, or via any other agreement lines by which the 
same commercial rate applies, not touching any of the land- 
grant lines over which the rate was made, and the Government 
will only be called upon to pay the net rate established for the 
longest land-grant lines. 

These lines which have agreed to give the same rates as the 
land-grant lines are known as “ Equalization lines,” and a com¬ 
plete list of them, together with the agreement which they have 
signed, and many general and special exceptions thereto, are 
shown in Appendix 9, Manual for the Quartermaster Corps. In 
Appendix 7 of the manual you will find a schedule of the land- 
grant railroads, the acts under which they were constructed, and 
a map showing these lines and their principal connections. 

These agreements of the various railroads to equalize land- 
grant rates are of great benefit to the Government in that they 
allow a choice of almost all roads at the lowest rates available, 
instead of the Government being restricted to routing shipments 
or passengers over the land-grant lines, in order to secure the 
lower rates, as would be the case in the absence of agreements 
to equalize. 

It may be stated, for information, that no land-grant deduc¬ 
tion is made for sleeping-car fares or from the rates charged 
by express companies, but the regular commercial rates are paid 
for this travel. 

A great deal of progress has been made in the last few years 
in the direction of simplifying the methods of handling accounts 
for Government transportation over land-grant railroads. 
Agreements have been secured from nearly all the important 
lines to equalize the land-grant rates. The percentage of land- 
grant deduction between nearly all important points has been 
fixed, and this information is all published in the Appendix to 
the Manual for the Quartermaster Corps. In addition to this. 




20 


the carriers are publishing, from time to time, tariffs showing 
the basis for establishing net rates on both freight and passen¬ 
ger traffic between all important points. With most of these the 
only officers interested are those charged with the settlement of 
transportation accounts. The principal thing necessary for the 
quartermaster who is forwarding passengers or supplies is to 
study carefully Appendix No. 9, Manual for the Quartermaster 
Corps, showing the equalization carriers, and comply carefully 
with the instructions outlined therein. 

Gentlemen, I thank yon. 


o 


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